Curret Eonomic Outlook Of The US (October 25, 2001)

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Date: October 25, 2001 To: Alan Greenspan, Chairman, Federal Reserve From: John Steinwehe, Staff Economist Re: Current Economic Outlook I. Overview Mr. Greenspan, allow me to advise you on the current economic situation being faced by the United States. To do this analysis, we both need to understand some key economic factors and terms. First is the Gross Domestic Product, also know as the GDP. This term is used to describe the market value of all final goods and services produced within a country in a given time span. The current GDP of the USA is about $10,202.6 billion. Real Gross Domestic Product (RGDP) is the production of goods and services valued at constant prices. Currently, the US RGDP is in the neighborhood of $9,341.7 billion. The rate at which the RGDP grows is called, creatively, the Growth Rate of RGDP. Right now, this rate is 0.1%. Unemployment, which is how much of the possible workforce doesn't have a job, is 4.9%

in the US. Inflation can be used to model the economy, and we can measure inflation by using the CPI, or the Consumer Price Index. The CPI is a measure of the overall cost of the goods and services bought by a typical consumer. When all the money taken in and spent by an administration is tallied up, the result is either a deficit (the government spent more money than it took in), or a surplus. (The government spent less money than they took in) The surplus for 2001 was $121 billion. The actual surplus for 2000 was $237 billion.

II. Recent Trends Now for some recent activity of the above mentioned statistics. The nominal GPD of the US has been rising slowly but surely for the last 6 years. In 1995, the nations GPD was $7,432.8 billion.



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